The National Association of REALTORS® (NAR) settlement represents a significant turning point for real estate professionals and consumers alike. With multiple lawsuits challenging long-standing practices, this settlement highlights the importance of transparency, consumer choice, and adherence to legal standards. Here’s what you need to know about the settlement, its implications, and how to adapt your practices to minimize liability.
The Core Issue: Alleged Violations of the Sherman Anti-Trust Act
At the heart of the lawsuits is the claim that blanket offers of cooperating compensation by listing brokers, a common practice in the real estate industry, violates the Sherman Anti-Trust Act. Plaintiffs argued that when sellers pay the full commission to their listing brokers, who then share it with buyers’ brokers based on pre-advertised terms in an MLS, buyers are effectively deprived of the opportunity to negotiate their broker’s compensation. This system, they allege, inflates transaction costs and undermines consumer choice.
Additionally, the Department of Justice (DOJ) has taken an active role in investigating these practices. Their stance goes further, suggesting that to avoid anti-trust concerns, sellers should only pay listing agents, while buyers should pay their agents directly.
Key Legal Cases and Their Implications
Nosalek Case and Sitzer-Burnett Lawsuit
The Nosalek case in Massachusetts and the Sitzer-Burnett lawsuit in Missouri are pivotal examples of how these issues are playing out. In both cases, plaintiffs alleged that listing brokers’ advertising of compensation violated the Sherman Anti-Trust Act. Settlements in both cases include compromises limiting the display of the listing broker’s display of offers of compensation to buyer brokers. In Nosalek, the parties propose to prohibit the display of compensation from listing brokers, but not sellers, in a non-REALTOR® MLS. In Sitzer-Burnett, REALTORS® agreed to prohibit any offers of compensation in the MLS.
Membership Isn’t a Shield
Whether you’re a member of NAR or not, participation in practices deemed anti-trust can result in liability. The courts and the DOJ focus on the behavior, not REALTOR® affiliation. This means non-REALTOR® MLSs and independent licensees are equally vulnerable to litigation.
Practice Changes Required by the Sitzer-Burnett Settlement
Elimination of MLS Compensation Offers
One of the most significant changes is the prohibition of advertising offers of compensation in MLSs. Instead, compensation arrangements must now be negotiated privately. This change aims to reduce the risk of price-fixing allegations while promoting consumer choice. Compensation cannot be mentioned in any form in a REALTOR®-owned MLS or in any MLS that opted in to the settlement.
Adoption of Written Agreements
REALTORS® must now use written agreements when working with buyers, clearly outlining compensation terms. This includes:
- Disclosure of the compensation amount or rate.
- A prohibition against exceeding agreed-upon amounts.
- A clear statement that commissions are negotiable and not set by law.
These requirements build on earlier updates to the copyrighted MAR Buyer’s Agency Agreement, which were introduced in mid-2024. Those changes emphasized the need for transparency and outlined steps REALTORS® should take to formalize relationships with buyers.
Adapting Your Practices to Minimize Risk
1. Avoid Anti-Trust Behaviors
Do not engage in practices deemed anti-trust, such as participating in multi-broker database compilations of property data with compensation offers. The best protection is to follow the changes outlined in the settlement.
2. Educate Your Clients
Transparent communication is critical. Explain clearly the services you provide, their value to the transaction and how you earn your fees. Educating both your buyer and seller clients builds trust and ensures compliance with the new standards.
3. Stay Informed and Compliant
Take advantage of educational resources like the Mississippi REALTORS® Institute to stay up to date on these changes and learn best practices for compliance.
What This Means for Consumers
For buyers and sellers, these changes represent an opportunity for greater transparency and choice in real estate transactions. Buyers can negotiate directly with their agents, and sellers have more flexibility in how they market their properties. The goal is to empower consumers and ensure fair practices across the industry.
Embrace Change, Protect Your Future
The NAR settlement marks a new era in real estate. By adopting the required changes, REALTORS® can protect themselves from liability while providing better service to their clients. Transparency, education, and adherence to best practices are key to thriving in this new landscape.
Stay informed and ahead of the curve. Enroll in our educational programs and equip yourself for success in a new era of real estate.
To learn more, visit the Mississippi REALTORS® Institute or contact us directly at 601-932-5241. You can also use our contact form to reach out with specific questions or requests.
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